Good afternoon to members of the committee and to the other invited guests.
Thank you very much for inviting me and allowing me to join you today from a very rainy Halifax via video conference.
I'm founder and president of TeamSpace. We're a development studio based here in Halifax. TeamSpace maintains a full-time staff of roughly 80 people, the majority of whom live here in Nova Scotia, with some staff in Toronto, the United States, and England. Roughly 12 years old, TeamSpace has grown steadily, having been recognized five times as one of the fastest-growing companies in Atlantic Canada.
A native Nova Scotian, I founded TeamSpace after returning from a degree at Harvard and an IT career in Boston. I'm very proud that we've been able to build a world-class business here in the Maritimes.
TeamSpace's core business is software engineering for interactive projects. Like many companies in this region, and I suspect across Canada, we've built our business on a mix of services contracts and original intellectual property game development.
We do very little work on the large, blockbuster-style console video games. Instead, we target and service the other huge and growing segments of the entertainment software industry: interactive websites, web-based casual games, online multiplayer virtual worlds, social games on platforms like Facebook, and mobile games on smart phones and tablets. That strategy of building many smaller games and projects has allowed us to better manage our human resources, I would say. It's helped us to retain a stable and steadily growing pool of talent rather than having an up-and-down flow of staffing for large projects.
Our work in the entertainment software industry primarily targets large media companies and broadcasters that own and license popular intellectual property and characters and that drive much of the online entertainment revenue through established advertising business models. International brands such as Nickelodeon, MTV, Sony Pictures, Fox, and NBC all buy software engineering services and games from us. Nearly 100% of our business comes from outside Nova Scotia, and most of it comes from outside Canada.
Our services and products are highly exportable around the world, which drives a direct benefit to our region. I would argue that the entertainment software industry is a key component of the shifting export economy in Canada. In support of that argument, I would note that TeamSpace was recognized as Nova Scotia's Exporter of the Year last year.
As an exporter, however, we are fully exposed to currency effects. The rising Canadian dollar has had a direct negative impact on our profitability and our ability to be competitive on the world stage. We have world-class talent here in Canada, but we have seen our traditional cost advantage erode dramatically due to our rising dollar.
I mentioned our world-class talent. While the large game development centres in Montreal, Vancouver, and Toronto have traditionally received much well-earned attention, other regions of the country, like Atlantic Canada, should not be overlooked.
The success of the film and animation industries here in Atlantic Canada over the past few decades has built a strong base of talent in art and design, sound production, and acting talent. Those industries, particularly animation and including a number of graduates I know locally from Sheridan College, have faced significant challenges in recent years in trying to remain vibrant and to reinvent themselves in the global economy. The rise of the game development industry has provided a new outlet to apply those skills and to keep that experienced talent employed here in the region.
At TeamSpace, we recognized early that software programming talent is often hard to find for many studios. We focused on building a concentration of programmers in Halifax for use on our game projects and to fulfill services projects for larger studios and for our media clients. For the life of the company, though, finding enough skilled programmers and project leads has always been our greatest challenge.
Nova Scotia is home to many outstanding colleges and universities, many of which are adjusting their curricula to graduate students with the skills needed in this industry. Their doors are open, but from my perspective, there aren't enough students enrolling or enough graduates staying here. I believe more work can be done by all of us to make Canada's youth better aware of the career prospects in this industry, to support them financially as they consider enrolling in post-secondary computer science and game-design programs, and to incent them to seek employment in all regions of Canada, including Atlantic Canada. A good mobile game can be built with a relatively small team. With the right incentives, we could see many more successful studios in all corners of the country.
Our ability to grow our staff has also been impacted by immigration challenges, some of which have already been spoken about by other members of the invited panel. Our industry moves at a brisk pace. When we need to add skilled personnel to help us fulfill a new contract or to complete an existing game, we often need people in a matter of weeks or even days.
A few years ago, we were able to look to immigrants to help us fill that need, but over the past couple of years, changes to temporary foreign IT worker guidelines have slowed the work permit process to a pace that is, frankly, untenable for us. That is particularly unfortunate, because often the immigrants we tend to need bring critical experience as mid- to senior-level project leads and game designers. Those experienced workers are much harder to find in Canada—most of them are busy—and it can take years of investment to grow them in-house. Those people have a multiplier effect. One new senior staff member may open up an opportunity to hire an entire new team of junior-level graduates to work under their leadership.
As I sit within sight of the Irving shipyard, I would also like to suggest that investment in the entertainment software industry can have benefits in other sectors, beyond traditional game development. For our part at TeamSpace, we have found that our skills and experience in programming, art, and game design translate very well into fields that rely increasingly on complex training and simulation, such as aerospace, defence, and health care. Similarly, our investments in game-related technical R and D have yielded dividends beyond that sector.
Projects in both traditional gaming and interactive simulation benefit from the government's investments in tax credit programs. As a studio with a heavy focus on software engineering, many of our projects contain elements that qualify for the federal SR and ED tax credit, which has helped us further innovate and remain relevant in the global digital marketplace.
Tax credits focused more specifically on digital media and gaming, as we've already heard, have to date been administered provincially, with notable differences across the country. Because of that provincial silo effect, as it currently stands, we have a strong disincentive to hire people in other provinces or to engage partners in other parts of Canada, since we can only claim credits against labour resident in our home province. A national digital media tax credit strategy could help to unify the industry and incent us all to source talent from across Canada first, before looking abroad for potentially cheaper offshore resources.
I would close with a request, which echoes comments we heard earlier, that our government continue to invest in programs that support Canada's telecom infrastructure. The gaming and digital media industries are moving at a breakneck pace toward online and wireless usage models. The demand for stable, ubiquitously available wired and wireless bandwidth is only going to grow, and grow fast. Things like high definition mobile video, anywhere/anytime gaming, and wireless commerce are becoming our new normal. We as a country need to have an infrastructure and a digital ecosystem that aligns with those demands if we hope to remain relevant to our target customers of tomorrow.
Thank you very much. I welcome any questions.